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In Brief

In Brief

The State of California's Department of General Services has issued Request for Qualifications on Natural Gas Services #9 as its annual solicitation for 12 months of gas supplies starting July 1, 1998 and ending June 30, 1999. DGS estimates it will require a little more than 14 Bcf going to about 120 public sector agencies during that period. Three contracts will be awarded, one for each of the LDC service areas of Pacific Gas &amp Electric, San Diego Gas &amp Electric and Southern California Gas. DGS is requesting a full-requirements supply contract in each area plus associated supply management functions (nominations and imbalance trading). Two separate pricing structures are involved: a monthly fixed volumes bid at an annual fixed price, and the remaining volume necessary to meet full requirements at a monthly index price. DGS again will use NGI's Gas Price Index for the indexed supplies: the PG&ampE Citygate in PG&ampE's territory and the Southern California border index in SoCal Gas' territory.

FERC last week gave its blessing to the indirect merger of two midwestern utilities - Wisconsin Public Service and Upper Peninsula Power. Wisconsin Public Service serves electric and gas customers in northeastern Wisconsin and the southern tip of the Michigan Upper Peninsula. It is a wholly-owned subsidiary of WPS Resources, an exempt public utility holding company. Upper Peninsula Power, a subsidiary of Upper Peninsula Energy, serves power customers within the western Upper Peninsula of Michigan. Under the merger agreement, Upper Peninsula Energy will be merged into WPS Resources, with WPS Resources as the surviving corporation. The two utilities - Wisconsin Public Service and Upper Peninsula Power - will maintain their separate corporate existence as subsidiaries of WPS Resources. Although they have no immediate plans to mesh their operations, the utilities asked that FERC approval of the indirect merger give them the go-ahead to combine their operations in the future, "even in the absence of any additional application for such approval." The Commission indicated there were no market-power concerns with the merger.

Union Pacific Resources Group sold its interests in the Wattenberg area of Colorado's Denver-Julesberg Basin to Denver-based United States Exploration Inc. for $41 million. The properties, which are in Adams, Arapahoe, Elbert and Weld counties, consist of 336 producing wells, which produced about 5.5 MMcf/d of gas and 640 barrels of liquids/d in 1997. UPR retained its royalty interest in the properties. The transaction closed May 15 and was effective Jan. 1. "This transaction is the first step toward accomplishing our previously announced de-leveraging program. This sale is an encouraging sign as we proceed toward completing additional property transactions," said Jack L. Messman, UPR CEO. The companies also executed an exploration agreement, giving United States Exploration the right to explore and develop certain undeveloped acreage in the Wattenberg area. UPR retains its royalty interest in these properties.

Providence Energy Corp. announced that ProvEnergy and Southern Energy Inc. have mutually agreed to end their joint efforts to develop a New England retail business. ProvEnergy said it is negotiating with Duke Energy Trading and Marketing to provide wholesale gas and electricity to support its retail marketing efforts. ProvEnergy already has begun buying gas from Duke for new retail business. ProvEnergy said it is integrating its services activities with its retail oil business "to provide natural gas, oil, electricity and equipment service to New England business and residential customers.

Bay State Gas shareholders approved the company's merger with NIPSCO Industries last week. The companies expect the merger approval process to conclude this fall. Completion of the transaction is also subject to approval by regulators in Massachusetts, New Hampshire, Maine, at FERC and at the Securities and Exchange Commission.

Southern Company, through its Southern Energy Inc. subsidiary, bought 1,260 MW of electric generating capacity in New England from subsidiaries of Commonwealth Energy System and Eastern Utilities Associates for $537 million. The company bought four of the plants (984 MW) for $462 million, or six times book value, from Commonwealth. "This acquisition gives Southern Energy and Southern Company Energy Marketing an excellent portfolio of power plants in New England, which will significantly benefit our trading and marketing efforts in that growing market," said Southern Energy President Tom Boren. "These assets give us the advantages of flexibility in fuel supplies while providing excellent opportunities for cost-effective expansion of our generating capacity."

Shareholders of American Electric Power and Central and South West Corp. approved actions necessary for the companies to complete their proposed merger. The merger must still receive approvals of federal and state regulatory agencies before it can be completed.

The Massachusetts Department of Telecommunications and Energy (DTE) approved the sale of New England Electric System's fossil and hydro generating business to PG&ampE Corp.'s affiliate, U.S. Gen New England. NEES is selling its 18 power plants representing almost 4,000 MW to USGenNE for $1.6 billion. FERC and Rhode Island already approved the sale. Only approvals from New Hampshire and Vermont remain.

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